There are times when I wonder how well the UK investment industry serves the public.
I do not mean customer service, but the general behaviour, the messages put out and how these affect the decisions made by investors.
In the run-up to Brexit, investment companies put out one scare story after another, with some commentators predicting the financial Armageddon if the UK voted Out.
On the eve of the vote, one respected commentator told me the FTSE 100 would fall by 1,000 points if we voted out. We voted out and the index did plummet – briefly.
There can be no disputing that the wall of negativity scared investors.
Investment Association statistics tell the story. Net retail sales were minus £3.5bn in June. Intriguingly, net institutional sales were £883m. A case of professionals’ mouths giving one message while their money told another?
July also saw net retail fund sales in negative territory of around £1bn.
More significantly, total net retail sales of equity funds over those two months were more than minus £5bn as spooked investors ran to fixed income.
As we now know, after the post-vote panic calmer heads prevailed.
The world did not end, and the stock market climbed and climbed. Those who sold missed out the best summer for several years.
Fidelity International analysed the stock market for a “Sell in May, Buy Again St Leger’s Day” piece. The figures from May to September serve just as well as an analysis of the consequences of Project Fear.
Those who stayed in the market would have seen returns of 9.41 per cent on the FTSE All Share – the best summer since 2009.
Those who listened to the doom and gloom and decided it was safer to get out of the market would have missed those returns – and many will have missed far more through selling out when the market was low.
Some will. no doubt. be sitting on this cash earning next to nothing and wondering whether or not to reinvest at today’s higher levels.
So well done to those who went out of their way to predict financial meltdown and talk the UK down in the run-up to and immediately after the referendum!
While the economy and the stock market may not have gone the way you predicted, you certainly managed to undermine the household finances of a good number of investors.
Lisa’s mission is to kill off pensions
The Lifetime Isa (Lisa) looks set to launch next April as confirmed by the Savings (Government Contributions) Bill published earlier this month.
I think most of us welcome sensible tax incentives to encourage savings, but there are concerns that Lisa may further muddy already murky waters.